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Wednesday, March 27, 2013

House Bill 12-1294 – New Change of Ownership (CHOW) Provisions

FYI. The Department reviews changes of ownership and charges a fee for such review. House Bill 1294 changed the definition of change of ownership (CHOW). The description below shows the differences before and after.

Before the passage of HB 1294, the definition of a change of ownership (CHOW) differed according to the type of ownership structure. The following were considered CHOWs:

for partnerships: dissolution of the partnership or substitution of a partner

for sole proprietors: transfer of the title to the business, but if the individual decided to form a corporation with the owner as the single shareholder, it was not a CHOW.

for corporations: any transaction that involved a change in at least 75 percent of the ownership

for a limited liability company (LLC): a transfer of 50 percent or more of the ownership or dissolution and conversion to another entity type accompanied by a change in principals.

After the passage of HB 1294, the definition of a CHOW became uniform for all types of ownership structures. The following is considered a CHOW:

for all types of ownership structure: transfer of at least 50 percent of the direct or indirect ownership to one or more new owners.